Fredericks Limited acquired the identifiable assets,liabilities and contingent liabilities of Nicole Limited for $134 000.The items acquired,stated at fair value,are: Plant $72 000 Inventory $40 000 Accounts receivable $18 000 Patents $10 000 Accounts payable $16 000.The difference on acquisition is:

Question

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The total fair value of the identifiable net assets acquired is $124,000 ($72,000 + $40,000 + $18,000 + $10,000 - $16,000). Since Fredericks Limited paid $134,000, the difference is $10,000, which represents goodwill.

Fredericks Limited Acquired the Identifiable Assets,liabilities and Contingent Liabilities of Nicole